Webinar report: Law firms’ ESG decisions in our current geopolitical environments – a follow-up discussion after the US president elections

On 12 November 2024, the ESG Subcommittee of the IBA Law Firm Management Committee, supported by the IBA European Regional Forum, hosted the second edition of the webinar on law firm environmental, social, governance (ESG) decisions in the current geopolitical environment. The panel was led by Pamela Cone and included Anna Babych, Sasja Beslik and Sean West. They discussed the implications of geopolitical developments, particularly the recent US elections, on ESG initiatives globally. They explored how shifts in political leadership, especially the return of Donald Trump, are likely to impact regulatory, economic and ESG landscapes.

The key takeaways

Impact of US elections

The Republican sweep and Trump’s presidency are expected to lead to deregulation, reduced corporate taxes and policies adverse to ESG principles, such as anti-immigration measures and increased tariffs. These changes could create volatility for businesses and challenge the growth of ESG initiatives in the US.

European perspective

While ESG remains a stronger focus in Europe, there are concerns about internal political instability (eg, in Germany) and its implications for collective support for Ukraine and broader democratic values. Europe’s regulatory leadership in ESG is seen as critical, with significant investments and legislative momentum driving progress.

Ukrainian insights

Ukraine’s perspective highlighted the importance of ESG in rebuilding efforts post-war, focusing on issues like de-mining, veteran reintegration and demographic challenges. The country is aligning with EU regulatory frameworks as part of its ambition to join the EU.

Global context

The panellists discussed the broader geopolitical dynamics involving China, Russia and the US. They highlighted the risks of increasing authoritarianism, the struggle for resources in regions like Africa and the challenges posed by the climate crisis and governance issues.

The conversation emphasised the need for a unified approach to sustain liberal democracies and foster long-term sustainability despite shifting political landscapes.

Key takeaways for law firms and in-house counsel

Adapting to shifting political landscapes

• US policy changes: the anticipated deregulation under Trump may open new business opportunities but could also create ESG-related risks, particularly for firms operating internationally. In-house counsels should prepare for potential trade conflicts, immigration audits and reduced government support for sustainability initiatives.
• Global instability: political shifts in Europe, such as instability in Germany, and geopolitical tensions (eg, US–China relations) could disrupt markets and regulatory environments, requiring proactive legal risk assessments.

The role of ESG in business strategy

• ESG opportunities and risks: although ESG faces challenges in the US, Europe remains a stronghold for ESG investments and regulations. Law firms should help clients navigate complex ESG compliance, especially in jurisdictions with evolving frameworks, such as the EU’s stringent ESG rules.
• Holistic approach: firms should consider ESG beyond environmental metrics, including social issues like labour practices, veterans’ reintegration and governance standards, particularly for clients involved in rebuilding efforts or operating in post-conflict zones like Ukraine.

Advising on compliance and advocacy

• Regulatory preparedness: in-house counsels must stay updated on ESG-related legislation in key markets, including the EU’s regulatory advancements, to guide corporate clients in compliance and avoid reputational risks.
• Advocacy and lobbying: with the potential rollback of ESG-friendly regulations in the US, law firms can help businesses engage in advocacy to influence policy changes or leverage market-specific advantages.

Global focus with local nuances

• Localisation of ESG practices: for multinational corporations, ESG compliance needs to reflect local regulations and cultural contexts, such as Europe’s emphasis on sustainable transition and Ukraine’s unique ESG priorities like de-mining and demographic resilience.
• Supply chain and resource access: legal teams should address geopolitical risks tied to supply chain disruptions, especially in resource-heavy regions like Africa, which are becoming battlegrounds for global influence.

Future-proofing legal services

• Strategic advisory: law firms should position themselves as thought leaders in ESG by offering strategic advice that aligns corporate governance and sustainability with long-term geopolitical trends.
• Technology integration: the intersection of legal and political risk, highlighted by one panellist’s tech-driven solutions, underscores the need for law firms to adopt innovative tools to assess and manage risks effectively.

By focusing on these areas, law firms and in-house counsels can help clients navigate the volatile geopolitical environment while positioning themselves as indispensable partners in achieving sustainable business practices.